discount rate definition
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- The discount rate is the interest rate charged to commercial banks and other depository institutions on loans they receive from their regional Federal Reserve Bank's lending facility--the discount window.
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The Federal Reserve and Interest Rates The Discount Rate. The discount rate is the interest rate banks are charged when they borrow funds overnight directly from one of the Federal Reserve Banks. When the cost of money increases for your bank, they are going to charge you more as a result. This makes capital more expensive and results in less borrowing.
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rate (reɪt) n. 1. a quantity or amount considered in relation to or measured against another quantity or amount: a rate of 70 miles an hour. 2. (Commerce) a. a price or charge with reference to a standard or scale: rate of interest; rate of discount. b. (as modifier): a rate card.
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DEFINITION of 'Market Discount' DEFINITION of 'Market Discount'. The difference between a bond's stated redemption price and its purchase price on the secondary market, if it has been purchased at a price below par. Market discount arises when a bond's value on the secondary market decreases after it has been issued, usually because of an increase in interest rates.
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What is a 'Coupon Rate' The coupon rate is the yield the bond paid on its issue date. This yield changes as the value of the bond changes, thus giving the bond's yield to maturity. A bond's coupon rate can be calculated by dividing the sum of the security's annual coupon payments and dividing them by the bond's par value.
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- Typically, a store will discount an item by a percent of the original price. In this problem, an item that originally costs $15 is being discounted by 10%. So 10% off refers to the rate of discount. To solve this problem, we need a procedure.
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Estimating future costs at public pension plans: Setting the discount rate The “proper way to value future cash flows such as pension benefit payments is with discount rates that reflect the risk of the payments. This is separate from the question of the rate pension funds will earn on their investments.”
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Definitions &Translations Webster Dictionary(0.00 / 0 votes)Rate this definition: 1  Discount. to deduct from an account, debt, charge, and the like; to make an abatement of; as, merchants sometimes discount five or six per cent for prompt payment of bills. 2  Discount.
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Financial Dictionary The annual percentage rate (APR) is a yearly rate, expressed as a percentage, that is charged for borrowing money, or accrued by investing money. This rate represents the cost of the amount borrowed over the term of the loan. Any additional costs or fees that are associated with this loan will be included in the APR.
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Discount and Sale Price Typically, a store will discount an item by a percent of the original price. In this problem, an item that originally costs $15 is being discounted by 10%. So 10% off refers to the rate of discount.
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What's the difference between the prime rate and the discount rate? What's the difference between the prime rate and the discount rate? Both the prime rate and discount rate are used in the financial system and set in the United States by the Federal Reserve Bank. The discount rate is used when the Federal Reserve makes a loan to a private bank or when commercial banks lend to each other.
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Discount and Sale Price Typically, a store will discount an item by a percent of the original price. In this problem, an item that originally costs $15 is being discounted by 10%. So 10% off refers to the rate of discount.To solve this problem, we need a procedure.rocedure: 1  The rate is usually given as a percent. 2  To find the discount, multiply the rate by the original price. 3  To find the sale price, subtract the discount from original price.
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Discounts and allowances Prompt payment discount. Trade Discounts are deductions in price given by the wholesaler or manufacturer to the retailer at the list price or catalogue price. Cash Discounts are reductions in price given by the creditor to the debitor to motivate the debitor to make payment with in specified time.
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Federal Reserve System The Federal Reserve System also directly sets the discount rate, which is the interest rate for discount window lending, overnight loans that member banks borrow directly from the Fed. This rate is generally set at a rate close to 100 basis points above the target federal funds rate.
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economic rate of return (ERR) Definition. Interest rate at which the cost and benefits of a project, discounted over its life, are equal. ERR differs from the financial rate of return in that it takes into account the effects of factors such as price controls, subsidies, and tax breaks to compute the actual cost the project to the economy.
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- A discount clause is a clause in your lease that says your rent is discounted if you pay it on time. A discount clause is a late payment penalty clause in disguise and is illegal.7 If your lease has such a clause and the landlord tries to collect extra money from you, do not pay it. Pay only the discount rent.
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Discount Received Definition: Discount Received Definition: A deduction from the amount due given to a business by a supplier when their account is paid before the time allowed has elapsed. It appears as income in the profit and loss part of the trading and profit and loss account. A D V E R T I S E M E N T.
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- DEFINITION of 'Annual Percentage Rate-APR'. The annual rate that is charged for borrowing (or made by investing), expressed as a single percentage number that represents the actual yearly cost of funds over the term of a loan. This includes any fees or additional costs associated with the transaction. Next Up.
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internal rate of return The discount rate at which the cash inflow on an investment equals its cash outflow. That is, the internal rate of return is the return necessary for the present value of an investment to equal what one spends in making the investment.
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APR Definition. Annual Percentage Rate. The yearly cost of a loan, including interest, insurance, and the origination fee (points), expressed as a percentage. Often applied to mortgages, credit cards, and automobile financing. For more information, see: Difference Between Interest Rate and APR.
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- trade discount. Definition. Goods traded in bulk supply, offered at a reduced price. This rule only applies to individuals authorized to trade. Use trade discount in a sentence.
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Meaning of âtrade discountâ in the English Dictionary trade discount meaning, definition, what is trade discount: a reduction in the price of goods or services that a company gives to other businesses…. Learn more.
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What is a trade discount? What is a trade discount? A trade discount is a reduction to the published price of a product. For example, a high-volume wholesaler might be entitled to a 40% trade discount, while a medium-volume wholesaler is given a 30% trade discount. A retail customer will receive no trade discount and will have to pay the published or list price. The use of trade discounts allows for having just one published price for each product. The sale and purchase will be recorded at the amount after the trade discount is subtracted.
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- The discount rate is what the Fed charges for overnight loans. The federal funds rate is what banks charge each other for an overnight loan. The Fed uses its control of the discount rate to influence the federal funds rate.
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Interest Rates and Bond Yields Multi-period Discount Factors. A nominal discount factor is the present value of one unit of currency to be paid with certainty at a stated future time. This definition suffices, whatever the time period. In a multi-period setting there is one discount factor for every time period.
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How Interest Rate Changes Affect the Price of Bonds The discount rate used is the rate of interest prevailing in the market for bonds of the same risk and maturity. When that interest rate changes, it affects the price of all bonds, but to varying degrees. The longer the maturity of your bond investments, the greater the price volatility.